The ongoing saga of Donald Sterling's attempts to regain, or retain, ownership of the Los Angeles Clippers continues. Last night, Donald filed a lawsuit against Shelly Sterling (his estranged wife), the Los Angeles Clippers, the NBA, and NBA Commissioner Adam Silver. This lawsuit alleges 12 causes of action, including:
This lawsuit is the third that Donald has filed in his attempt to regain, or retain, ownership of the Clippers. His original two lawsuits focused on the propriety of the NBA's sanctions against him and the propriety of Donald being declared mentally incompetent, resulting in his supposed loss of ownership of the team to Shelly.
Legal issues in this new case aside, what this does entail is that the ownership of the Clippers will not be a settled matter (according to the courts) for some time. Attorneys for Sterling have stated that this case may take several years to resolve. But what does that mean to the Clippers organization?
Dick Parsons, the interim CEO of the Clippers, testified in court yesterday that he fears if Donald were to remain owner of the team, it would plunge the organization into a "death spiral." He indicated that in the event Donald remains owner, Doc Rivers would not want to continue as head coach of the team. Further, Parsons testified that he has spoken with many of the team's players and sponsors who do not wish to remain with the Clippers should Donald remain Owner. Specifically, Parsons testified that sponsors who have yet to commit to the team for next year have indicated "We're in so long as Donald Sterling is out."
Sponsors generally have the ability to cancel their sponsorship agreements through the use of morals clauses in their contracts. Players don't have that option, although they can request to be released and/or traded.
Parsons testimony echoed the scenario that began when the Sterling audio tape was first released in April. In a few short weeks, sponsors canceled or paused their sponsorship agreements with the team. Further, rumors of a team-wide, and league-wide, boycott surfaced prior to Commissioner Silver banning Donald for life.
Parsons statements should not be taken lightly, as they are illustrative of the reality the Clippers will find itself in should Donald remain Owner. Unfortunately, Donald Sterling's three lawsuits can result substantial harm to the clippers. If the litigation is not voluntarily dismissed before the season commences, or if Donald manages to prevail in his litigation, then Parsons' "death spiral" comment will be realized. That is, unless the NBA takes action.
The NBA has yet to commence its formal proceeding to remove Donald Sterling as Owner from the Clippers and force the sale of the team. Pursuant to Article 13 of the NBA's Constitution and Bylaws, an Owner can be removed by a vote of three-fourths of the Board of Governors (made up of other team Owners) if an Owner commits any of the following:
Donald disputes in his first lawsuit against the NBA that he has not violated any of these provisions, although he has likely violated provisions numbered 1, 3 and 4 noted above. In particular, he has at least violated provision 4 by refusing to pay the $2.5 million fine. (Note: For a full analysis of the propriety of Sterling's sanctions, see my upcoming publication Not So Sterling: Assessing Donald Sterling's Breach of Contract Claims Against the NBA [Forthcoming Summer 2015])
The NBA had planned to have the Board of Governors vote to remove Donald's ownership of the Clippers on July 15, 2014. This date was set to be following the conclusion of the trial between Donald and Shelly Sterling about Donald's mental capacity. However, the trial has run long. The NBA intends to have Donald removed as owner prior to the start of next season, and has set a deadline of September 15 for any transfer of ownership through sale. Presumably, the NBA fears the "death spiral" that Parsons testified would occur should Donald remain Owner. However, if September 15, 2014, comes to pass and the team is not sold, the NBA will seek to remove ownership from Sterling and auction the team.
Although Donald Sterling's latest lawsuit delays the court's determination of ownership of the team, the NBA could move forward and remove Donald's ownership interest, even if the lawsuit about Donald's mental capacity is not resolved. Once the team is sold, the NBA could commence an action for interpleader, where Donald and Shelly can sort out who is entitled to the proceeds, or just await the determination of the suit between Donald and Shelly.
Donald Sterling's litigation tactics may be designed to delay the sale of the Clippers, but the NBA has the ability to initiate a proceeding to remove his ownership. Only time will tell if the NBA is able to accomplish its goal of removing Sterling prior to the start of next season. If the NBA fails to do so, we may see the "death spiral" of the Clippers that Parsons is warning about.
Last week, Lebron James announced that he would be returning to his hometown team, the Cleveland Cavaliers. The following day, the Cavaliers sold all of their remaining season ticket plans. However, the Cavaliers are not the only Ohio business benefitting from Lebron's return.
In anticipation of Lebron announcing what team he would sign with, Fresh Brewed Tees created a tee-shirt design it would sell should Lebron return to the Cavaliers. Fresh Brewed Tees tweeted this design to its sizable following, and within hours of Lebron's decision, the company sold out of its initial batch of shirts. (For more on Fresh Brewed Tees success following Lebron's announcement, see this article.)
The tee-shirt designed by Fresh Brewed Tees serves as a good example of ambush marketing done well. For a brief review of ambush marketing, see my previous post here. Take a look at the shirt design below:
Let's break down the elements of the shirts shown above. Remember, proper ambush marketing does not use or directly associate itself with any protected trademarks surrounding an event. In this case, the event being Lebron's return to the Cleveland Cavaliers.
The most prominent feature of the design is the word FOR6IVEN, which is clearly a play on the word "Forgiven" with the number six replacing the G. The word "Forgiven" does not allude to any trademarks held by Lebron, the Cavaliers, or the NBA. The text is bolded and entirely in capitals, which is distinct from the Cavaliers logo. Additionally, the text is in a different font than the Cavaliers' logo. The number six that replaces the G is also not associated with any known trademark owned by the Cavaliers or Lebron, and exists as an allusion to Lebron's jersey number while playing for the Miami Heat. It is still not known whether Lebron will even wear a 6 on his jersey in Cleveland.
Actually, Fresh Brewed Tees should be able to trademark the term "FOR6IVEN" for use on apparel, specifically tee-shirts. As a trademark is a word, phrase, symbol or design that identifies and distinguishes the source of goods from others, Fresh Brewed Tees could trademark the word to create a line of tee-shirts, or other clothing, which similarly allude to Lebron. A quick search of the US Patent and Trademark Office's trademark database revealed no trademark filings for the term.
THE KINGDOM RESTORED
This phrase is a secondary design element of the tee-shirt, appearing below "FOR6IVEN" in plain text and all capital letters. This phrase is an allusion to Lebron James' nickname "King James," which is trademarked, and is perhaps suggesting that Ohio, or Cleveland, is the kingdom. In the context of the shirt, "kingdom" is somewhat vague. The phrase does not specify what said kingdom is or who rules it. Ultimately, the allusion to Lebron is so removed from the trademark that it would not constitute infringement. Given the phrase "THE KINGDOM RESTORED," there appears to be little, if any, likelihood of confusion with Lebron's trademark.
The image of a basketball with a sword through it
The final element of the tee-shirt is an image of a basketball with a sword through it, placed on the center of the shirt, below all other elements. This element is an allusion to the Cavaliers logo, which also contains a sword and basketball. However, in the Cavaliers logo, the sword is puncturing the team name in the foreground of a basketball. Additionally, the two swords are strikingly similar.
This element of the tee-shirt design is too close to the trademarked logo of the Cavaliers, possibly creating a likelihood of confusion. As the Cavaliers sell tee-shirts featuring their logo, the shirts would be in the same channels of commerce, strengthening any infringement claim. There also is a colorable argument that Fresh Brewed Tees intentionally selected this design element to be similar to elements of the Cavaliers' logo. By implementing the sword and basketball design, purchasers further understand the connection of the above phrases with the team.
On the other hand, if faced with an infringement suit, Fresh Brewed Tees could claim that the Cavaliers' logo is distinct from its design as the sword in the logo pierces the team name and not the basketball. Further, the company could argue that the sword used is generic, and not specific to the Cavaliers' logo. It is unclear whether Fresh Brewed Tees would prevail on such an argument, but to avoid a potential infringement suit, it may be in Fresh Brewed Tees best interest to remove the sword and basketball image.
Although Fresh Brewed Tees ambush of Lebron's return to Cleveland has been financially successful in a short period of time and mostly proper, the company may wish to consider removing the image of a sword through a basketball to avoid a potential infringement suit. Should the company do so, its FOR6IVEN tee-shirts will serve as a primary example of a proper ambush.
Now that Lebron James has announced his return to the Cleveland Cavaliers, the basketball world is awaiting Carmelo Anthony's decision on what team he will sign with. Phil Jackson, President of the New York Knicks, is optimistic Carmelo will re-sign, as the team is willing to use the Veteran Free Agent Exception to the salary cap in order to retain him.
Ordinarily, the aggregate salaries of an NBA team must remain under the salary cap provided for in the NBA's Collective Bargaining Agreement ("CBA".) However, the CBA provides for several exceptions, which are defined in Article VII, Section 6, where player salaries may total more than the salary cap.
One of the exceptions to the salary cap are the so-called "Larry Bird rights." In the CBA, this is officially known as the Veteran Free Agent Exception.
The Veteran Free Agent Exception allows players to re-sign with their team at an amount that cannot exceed a defined percentage of the salary cap or a defined percentage of the player's earnings in their last season, whichever is greater. The particular percentages are determined by the years of service time the player has been in the NBA.
For purposes of this exception, the CBA groups players by service time of less than seven seasons, between seven and ten seasons, and more than ten seasons. In determining the maximum contract amount under this exception, the percentage of the player's earnings in the last season is constant at 105% regardless of service time. However, the percentage that the contract may be of the salary cap increases with each service group from 25%, to 30%, and 35%. Carmelo is in the last service group, having played for eleven seasons.
However, the Veteran Free Agent Exception does not apply to all players entering free agency. In order to qualify, a player must have played the last three seasons with one team, have changed teams only by means of trade, or have signed with a prior team during the first of the three preceding seasons. Carmelo has played more than three seasons with the Knicks, and is therefore eligible for this exception.
Effectively, the Veteran Free Agent Exception operates as an incentive for players to resign with a team by offering them a salary that cannot be matched by other teams due to salary cap constraints. In turn, this allows the fan base to develop a greater bond with the player, which can then be leveraged by the team and player in marketing endeavors.
By utilizing the Veteran Free Agent Exception, it has been reported that the Knicks offered Carmelo a contract for $129 million for five years, or the maximum contract allowed. In contrast, other teams have only been able to offer him $96 million for four years. The difference between the two contracts is the Knicks are able to offer an additional year and an additional $33 million.
Hopefully, Carmelo, re-signs with the Knicks. As a result of the Veteran Free Agent Exception, he certainly has an additional thirty three million reasons to do so.
Quiles Law is an esports and sports law firm based in New York City.
60 Bay Street, Suite 700
Staten Island, New York 10301
(P) (917) 477-7942
(F) (917) 791-9782
Attorney Advertising. The information presented in this site should not be construed to be formal legal advice nor is it intended to form any attorney/client relationship. Our attorneys, collectively, are licensed to practice law in the States of New York, New Jersey, and Pennsylvania. Copyright Roger R. Quiles, Esq., 2018. All rights reserved.